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Military Income Deduction Information

Section 143.174, RSMo provides a deduction for military income earned as a member of the active duty component of the Armed Forces of the United States. Below is some helpful information regarding the military deduction:

This deduction may be claimed on the Military Income Deduction line of the Missouri Individual Income Tax Return (Form MO-1040). The 2016 return (line 19) is the first year this deduction may be claimed.

The military income must be included in the federal adjusted gross income and not have been previously taken as a deduction or subtraction.

When submitting your return, include ALL copies of your Leave and Earnings Statement(s) for the tax year that validate you were on active duty, active duty training or annual training and the amount you earned on active duty. Failure to attach ALL required statements may result in the disallowance of the deduction. A PDF of these documents should be provided with filing your return electronically.

The military income deduction is available for the amount of pay received while: (REVISED – NOVEMBER 2017)

Ordered to federal active duty status under 10 USC or 32 USC

Participating in Annual Training (typically 2 weeks a year)

Participating in other active training or schools, except for Inactive Duty for Training, which does NOT qualify for this deduction.

You may NOT take the deduction for the amount of pay you received while on:

State Active Duty (shown on your state W-2 form)

Inactive Duty Training - While this may appear on a Leave and Earnings Statement, Inactive Duty for Training does not qualify for the military income deduction.

All Missouri returns claiming the military deduction will be compared to income data (Form W-2 data) provided by the Defense Finance and Accounting Service (DFAS).

Military Income Deduction Update:

For tax years beginning on or after January 1, 2016, Section 143,174, RSMo, allows taxpayers a military deduction for the income received as a member of the active duty component of the Armed Forces of the United States.

In November 2017, the Department of Revenue expanded the definition of who qualifies for the military income deduction claimed on the Missouri individual income tax return. The previous definition allowed the deduction for the active duty pay received under 10 USC or Section 32 USC 502(f). The new definition includes the amount of pay received while:

Ordered to federal active duty status under 10 USC or 32 USC

Participating in Annual Training (typically 2 weeks a year), or

Participating in other active training or schools

Individuals may not take the military income deduction for the amount of pay received while on:

State Active Duty (shown on your state W-2 form)

Inactive Duty Training

Taxpayers who qualify under this new expanded definition may file a 2016 Missouri individual income tax return (or amended return) and claim the deduction. In general, refund claims must be filed within three years of the original due date or within two years of the date of payment.